What Does a Venture Capital Investment Bank Do?

A venture capital company is a specialized venture fund (or venture capital) that effectively invests the funds it manages into high-tech companies with high profit potential, and obtains capital returns through the latter's listing or merger and acquisition.

The venture capital company

Venture capital firms are specialized venture funds (or

Except for the fact that the patrons are startup companies rather than large companies, venture capital companies are similar to

Venture capital companies can be classified as follows based on ownership and affiliation.

1.

Top 10 Venture Capital Companies in the U.S.

Company Name	annual Total number of investment enterprises	Quarterly average Number of investment companies	Fourth season Number of investment companies	Fourth season and year Comparison of average investment companies
1.Defengjie	132	33	twenty two	-33%
2.New Enterprise Associates	92	twenty three	15	-35%
3.Intel Investment	81	20	18	-11%
4.Kleiner Perkins Caufield & Byers	79	20	10	-49%
5.Polaris Venture Partners	67	17	twenty three	37%
6.Sequoia Capital	65	16	9	-45%
7.US Venture Partners	65	16	twenty four	48%
8.Warburg Pincus	55	14	17	twenty four%
9.Atlas Venture	55	14	twenty one	53%
10.Venrock Associates	54	14	13	-4%
11.InterWest Partners	54	14	13	-4%

Top 10 Venture Capital Companies in China

1.IDG Technology Venture Capital Fund

2. Softbank China Venture Capital Co., Ltd.

3. Carlyle Investment Group

4.Sequoia Capital China Fund

5.Goldman Sachs Asia

6. Morgan Stanley

7. United States

First trial

The work done by venture capitalists includes: raising funds, managing funds, finding the best investment objects, negotiating and investing, managing investments to achieve their goals, and striving to satisfy investors. In the past, venture capitalists spent about 60% of their time looking for investment opportunities, but today this proportion has been reduced to 40%. Most of the other time is spent managing and monitoring the funds invested. Therefore, after getting the business plan and summary, the venture capitalist often takes a short time to browse through it to decide whether it is worth the time in this matter. There must be something that attracted him to take time to study it carefully. So the first feeling is especially important.

Negotiations between venture capitalists

In large venture capital companies, the relevant personnel will gather together regularly to discuss the project proposal that passed the preliminary review, and decide whether an interview is required or rejected.

Interview

If the venture capitalist is interested in the project proposed by the entrepreneur, he will contact the entrepreneur to directly understand its background, management team and enterprise. This is the most important meeting in the entire process. If not done well, the transaction will fail. If the interview is successful, the venture capitalist will hope to learn more about the company and the market, and perhaps he will mobilize other venture capitalists who may be interested in this ~ project.

Fourth, responsibility review

If the initial interview is successful, the venture capitalist then starts to investigate the entrepreneur's business situation and learn as much as possible about the project. They carefully evaluate the technology, market potential and scale of the prospective company, and the management team through a review process, which includes contacting potential customers, consulting technical experts and holding several rounds of talks with the management team. It usually includes a visit to the company. Interview with key personnel, value equipment and supply and marketing channels. It may also include talking to corporate creditors, customers, and previous employers of related parties. These people will help venture capitalists draw conclusions about the entrepreneur's personal risk.

The evaluation of projects by venture capital is a combination of reason and inspiration. Its rational analysis is similar to general business analysis, such as market analysis, cost accounting methods, and the content of business plans. The difference is that inspiration occupies a certain proportion in venture capital, such as grasping technology and evaluating people.

V. List of Terms

After the review phase is completed, if the venture capitalist believes that the prospect of the applied project is promising, then the investment form and valuation can be negotiated. Entrepreneurs usually get a list of terms outlining what is involved. This process may take several months. Because the entrepreneur may not understand the content of the negotiation, how much he will pay, how much shares the venture capitalist hopes to obtain, who else participates in the project, what will happen to him and the current management team. For entrepreneurs, take the time to study these and reduce the number of terms as much as possible.

Signing a contract

Venture capitalists strive to adapt their investment returns to the risks they assume. According to a practical plan, venture capitalists analyze the investment value of the next 3 to 5 years, first calculate their cash flow or income forecasts, and then based on technology, management, skills, experience, business plans, intellectual property and work progress. Evaluate, determine the size of the risk, select an appropriate discount rate, and calculate the net present value of the venture company it considers. Based on their respective assessments of the value of the enterprise, the two parties to the investment reached the final transaction value through negotiation. Factors affecting the final transaction value include:

1. Market size of venture capital. The more funds in the venture capital market, the more urgent the demand for venture companies, which will cause the value of venture companies to rise upward. In this case, venture capitalists can exchange venture capitalists' capital for a smaller price.

2. Exit strategy. The market's response to listing and mergers and acquisitions directly affects the value of venture companies. Research shows that listing and mergers and acquisitions are both possible withdrawal methods, which is more conducive to increasing the value of venture companies than simply merging and withdrawing.

3. Risk universities can increase the value of venture companies by reducing risks and uncertainties in technology, marketing strategies, and finances.

4. Capital market timing. In general, when the stock market is optimistic, the value of venture companies is also optimistic. After the bargaining, the two parties enter the stage of signing an agreement and sign a contract representing the wishes and obligations of both the entrepreneur and the venture capitalist. Regarding the contents of the contract, the US East Coast, West Coast, and other countries are different. On the US West Coast, the content list is a more complete document, and on the East Coast, more formal contract signing procedures are required. Once the final agreement is signed, entrepreneurs can get funding to continue to achieve the goals set out in their business plan. In most agreements, exit plans are also included, which simply outline how venture capitalists withdraw their funds and what to do if they encounter budgets, major events, and other goals that have not been met.

Seven, supervision after the investment takes effect

After the investment takes effect, the venture capitalist owns the shares of the venture company and holds a seat on its board of directors. Most venture capitalists act as consultants on the board. They usually get involved in several companies at the same time, so they don't have time to play other roles. As consultants, they mainly make suggestions on improving business conditions to obtain more profits, help companies find new managers (managers), regularly contact entrepreneurs to track and understand the progress of operations, and regularly review financial submissions from accounting firms. analysis report. Since venture capitalists know the business areas they invest in, their recommendations can be very informative. In order to strengthen the control of the enterprise, the contract usually includes clauses that can change management personnel and accept mergers and acquisitions.

8. Other investment matters

There are also some venture capital companies that sometimes take the form of convertible preference shares, have the right to expand their ownership in the company at an appropriate time, and have the right to preferential liquidation when the company is liquidated. In order to reduce risks, venture capitalists often jointly invest in a certain project, so that each venture capitalist's equity in the same company is between 20% and 30%, which reduces risk on the one hand, and also brings risks to venture companies More management and consulting resources are provided, and multiple evaluation results are provided for venture companies, reducing evaluation errors.

If venture companies are in trouble, venture capitalists may be forced to intervene or take over completely. He may have to hire other capable people to replace the original management team, or manage venture companies in person.